ICSC, JLL Findings: Retail Investment Globalizing

By Anna Spiewak, News Editor: The International Council of Shopping Centers and Jones Lang LaSalle Inc. issued a study showing that retail real estate is steadily going more global, as investors look for a yield in a post-Great Recession and recovery market.

The retail market is going global, according to preliminary findings from a study recently issued by the International Council of Shopping Centers and Jones Lang LaSalle Inc..

In the last decade, more than $1 trillion of retail real estate has been directly traded, of which more than one-third has involved cross-border capital.

According to JLL findings, cross-border activity, which accounted for only one-quarter of volumes back in 2004, now accounts for nearly half of trade. 2011 and first half of 2012 have seen a record of $46 billion of inter-regional capital flows.

“In this time of post-Great Recession and recovery and with the euro-zone backdrop, the search by investors globally for a yield, with this kind of low interest rate, makes commercial property in general-, but retail specifically, an attractive investment alternative,” Josh Gerolmini, director of capital markets research at JLL, told Commercial Property Executive. “It’s important to have some defensive characteristics from an investment perspective and those characteristics are more at play when you’re talking about higher-quality centers—prime shopping centers.”

According to Gerolmini, the advanced, more mature markets–such as North America, Canada and Australia, as well as parts of Europe and Japan–still account for 80 percent of overall global retail investment. But there is a shift underway that is going eastward and southward. The company projects that emerging, growth markets will continue to attract greater capital overseas.

“The share of overall investment in global retail in emerging markets is currently less than 10 percent, but over the course of the next seven or eight years, we expect that number to shoot to around 25 percent,” Gerolmini added.

The multi-national study examines the evolution and future of global retail real estate investment. ICSC and JLL will release the remainder of their findings at the 2012 ICSC Retail Real Estate World Summit in Shanghai (www.ICSC.org/2012RWS) in mid-September.

The findings presented at the summit will explore four key areas:

A Typology of Retail Investment Destination—a review of the different investment market characteristics across the globe

Recent Patterns of Retail Investment—a look at the current wave of globalization and which countries are attracting the most investment

Regional Trends in Retail Investment—a comparison of regional patterns across Asia Pacific, the Americas, Europe, the Middle East and Africa

The Future of Retail Investment Landscape—a forecast on how the investment landscape will change over the remainder of the decade

“The World Summit is undeniably the most appropriate setting from which to release such impactful information, as the foremost global leaders in retail real estate investment will be in attendance,” said Lauralee Martin, CFO at JLL, in a release.